This is true, and while keeping the overall number of customers constant is very much in the spirit of the book as we discussed in our review of Return on Customer, it is easily remedied and may provide additional insights.

If N is the number of customers, then the Return on Customer (ROC) formula for the enterprise is:

Following the calculation through as before gives us

Again the change elements broadly make sense. In our simplified model you make more money by increasing the number of customers, increasing the free cash flow from each customer, or reducing the churn rate.

And again the initial element seems out of place. Lower churn is good, but presumably higher ROC is good, unlike what is suggested by the formula.

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